The big picture

Irish exporters were among those that benefited in a global surge that saw the Stoxx Europe 600 Index rally to its highest level in almost three weeks with a 1.2pc gain. Stock image

News of a deal struck at the G20 summit to avert the next damaging leg-up of a trade war between the world’s two economic superpowers – the United States and China – gave stock markets a much-needed reprieve in yesterday’s trading.

Irish exporters were among those that benefited in a global surge that saw the Stoxx Europe 600 Index rally to its highest level in almost three weeks with a 1.2pc gain.

That is a relief for battered market investors. However, even if the three-month truce between Presidents Donald Trump and Xi Jinping holds – and that is very much open to question – data from the World Trade Organisation shows that trade is already in retreat, thanks to the rising tide of tariffs from Washington DC.

The Geneva-based body, which was set up in 1995 to promote trade rules, said in its most recent report that global trade growth is likely to slow further into the fourth quarter of this year.

That is worrying as global trade growth generally outpaces overall world gross domestic product growth by a factor of 1.5, and it comes at a time when the economic outlook for many countries has already taken a severe hit.

The body’s World Trade Outlook Indicator fell to its lowest level since October 2016 and now stands at 98.6 on a scale where readings of 100 indicate growth in line with recent trends, readings greater than 100 suggest above-trend growth, while those below 100 indicate a decline.

The decline mirrors a ratcheting up in protectionist measures, not only from Mr Trump’s America.

According to the WTO, an estimated $481bn of these new restrictions were imposed by Group of 20 economies from mid-May to mid-October 2018, more than six times the level imposed in the previous reporting period.

The problem with trade tariffs and other restrictions is that once they are imposed, they are difficult to dislodge.

Just look at the US ‘Chicken Tax’ which was imposed by President Lyndon B Johnson on light truck and other imports from France and Germany in 1964 in a dispute over imports of chicken by the European countries.

The dispute has long been forgotten. However, 54 years later, there is still a 25pc duty on light truck imports to the United States, a measure that acts as a subsidy for American carmakers in the SUV sector.

It is a tax that is also responsible for the hulking wagons that clog streets here.

As for the tariffs, while they appear to fatten the bottom lines of some companies and distort markets, there is little gain for workers.

Mr Trump’s boast that he would bring well-paid manufacturing jobs to the United States must sound hollow to the 14,000 GM workers who were told in November they would lose their jobs. Or to the 1,000 to be laid off at a number of Harley-Davidson plants in the US.